State Leaders: Hartford Bailout Deal Imminent

Mayor Luke Bronin made a presentation to the state oversight panel as part of the city's quest for additional funds. State leaders say a deal is imminent. (Patrick Raycraft/Hartford Courant)

The state is weeks away from reaching a deal with city leaders to pick up some of Hartford’s annual debt, part of the bailout package for the capital city negotiated under the last state budget, officials said.

Hartford has asked for tens of millions of dollars in additional aid from the state. In return, it is being monitored by an oversight panel appointed by lawmakers and the governor.

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Part of the city’s request involves state-subsidized debt payments. Hartford’s annual debt is expected to skyrocket in the coming years, climbing as high as $61 million in 2021, up from $32 million in 2017, estimates show.

State officials have offered to take on a portion of those payments over the length of a contract that is now being hammered out.

“We’re actively engaged, and I expected that we’ll come to an agreement with the city in the coming weeks,” said Ben Barnes, secretary of Connecticut’s Office of Policy and Management.

Hartford could also get tens of millions from a state account set aside for distressed municipalities. Lawmakers allocated $48 million for that fund this year.

In an hours-long presentation to the oversight board Thursday, Hartford Mayor Luke Bronin, city Treasurer Adam Cloud and city department heads combed through Hartford’s financial troubles, from a $40 million deficit this year to the mounting debt obligations over the next decade.

Without state intervention, the city’s deficits would top $90 million by 2023, due in large part to escalating pension and debt payments. Another key problem, Bronin said, is that nearly half of the city’s properties are non-taxable, an issue that has long plagued Hartford. During a slideshow played for the oversight panel, the mayor noted that 49.8 percent of city properties were tax exempt.

A slide from Hartford leaders' presentation to the state oversight board shows escalating budget deficits. (Handout/City of Hartford)

As part of Hartford’s recovery plan, Bronin suggested that the state pick up $20 million of Hartford’s debt each year beginning in 2019 and running through at least 2023. Those payments could extend over the life of the bonds, stretching out as long as 20 years.

He also recommended Hartford get a portion of the funds set aside for struggling municipalities — $28.5 million in 2018, $20 million in 2019, and $25 million in the years after that.

In the absence of state assistance, the mayor has said Hartford would weigh bankruptcy. He hired a law firm last summer to explore the option.

Bronin said the city had shed about 100 jobs, shifted community service officers back onto patrol to save on overtime costs, eliminated city subsidies for parades and festivals, re-bid liability and other insurance contracts and “drastically” reduced funding for outside organizations. Hartford’s rainy day fund has dipped to about $4.5 million, he noted, prompting worried expressions from board members.

Despite Hartford’s problems, Barnes, a co-chair of the panel, said Thursday: “I have enormous confidence in the resiliency of cities.”

“While I appreciate the immensity of our challenge, I think Hartford will be here for many, many years after we’re all gone and prosper in many ways,” he said. “I think our job is to put it in the right direction.” One other municipality has applied for the additional state funds: West Haven.

Any labor agreements signed off on by Hartford leaders must also be approved by the oversight board. The group on Thursday voted in favor of a new six-year deal between the city and the American Federation of State, County and Municipal Employees Council 4, Local 1716 — the city’s second largest union. The contract includes four years of pay freezes and two raises, along with a switch to a high-deductible health care plan.

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In the coming weeks, Hartford will also have to submit a detailed, five-year plan for managing its finances.